For questions #6-18, refer to the following financial information for Plyler Ove
ID: 2421886 • Letter: F
Question
For questions #6-18, refer to the following financial information for Plyler Overhead Door.
YOU MUST SHOW ALL CALCULATIONS TO EARN CREDIT.
2014 2015
BALANCE SHEETS:
Cash 120,000 160,000
Accounts Receivable 520,000 620,000
Inventory 305,000 290,000
Fixed Assets, net 410,000 510,000
Total Assets 1,355,000 1,580,000
Liabilities and Equity:
Accounts Payable 350,000 $375,000
Long-term Debt 500,000 625,000
Common Stock 50,000 75,000
Retained Earnings 455,000 505,000
Total Liabilities and Equity 1,355,000 1,580,000
INCOME STATEMENT:
Revenue 3,500,000
Cost of Goods Sold 2,275,000
General and Administrative 515,000
Depreciation Expense 120,000
Earnings Before Interest and Taxes 590,000
Interest Expense 40,000
Pretax Net Income 550,000
Income Taxes 187,000
Net Income 363,000
What was Plyler’s total current assets at the end of 2015?
What was Plyler’s net working capital at the end of 2015?
What was Plyler’s shareholders’ equity at book value at the end of 2015?
An appraiser recently valued Plyler’s fixed assets at $600,000 and determined that $40,000 of their accounts receivable was noncollectible. Based on only this information, what was the market value of Plyler’s shareholders’ equity at the end of 2015?
Assuming that Plyler did not buy back or redeem any of its shares, how much new common stock did it issue in 2015?
How much dividends did Plyler pay out to its shareholders in 2015?
What was Plyler’s effective annual average tax rate in 2015?
If Plyler had 10,000 shares of common stock outstanding throughout 2015, what was its Earnings per Share (EPS) in 2015?
Assuming that Plyler didn’t dispose of any of its fixed assets, how much new capital spending did it incur in 2015?
What was Plyler’s Operating Cash Flow (OCF) in 2015?
What was Plyler’s investment in net working capital for 2015?
What was Plyler’s Cash Flow to Creditors in 2015?
What was Plyler’s Cash Flow to Stockholders in 2015?
Explanation / Answer
Answers to Questions (All amounts in $) Plyer's Total Current Assets at the end of 2015 = Cash + Accounts Receivable + Inventory Hence, Total Current Assets for 2015 = $ 160,000 + $ 620,000 + $ 290,000 = $ 1,070,000. Plyer's Net Working Capital at the end of 2015 is Current Assets - Current Liabilities Hence, Plyer's Net Working Capital for 2015 = $ 1,070,000 - $ 375,000 = $ 695,000. Plyer's Shareholders' Equity at book value at the end of 2015 is Total Assets less Total Liabilities Hence, Plyer's Shareholders' Equity at Book Value for 2015 = $ 1,580,000 - $ 375,000 - $ 625,000 = $ 580,000. The asset values of Plyer change per the valuation done Hence, Plyer's Shareholders' Equity at Market Value for 2015 is equal to Revised Total Assets = $ 1,580,000 + $ 100,000 (Increase in Fixed Assets) - $ 40,000 (Uncollectible Receivables) = $ 1,640,000 less $ 1,000,000 (Current Liabilities + Long Term Debt) = $ 640,000. Common Stock issued by Plyer in 2015 = Closing Common Stock - Opening Common Stock Hence, Common Stock issued by Plyer in 2015 = $ 75,000 - $ 50,000 = $ 25,000. Dividends paid to Plyer's Shareholders in 2015 Net Income per Income Statement 363000 Dividends Paid to Shareholders 293000 Balance trfd to Retained Earnings 70000 Opening Balance of Retained Earnings 455000 Closing Balance of Retained Earnings 505000 Plyer's effective Annual Tax Rate in 2015 = Income Tax / Net Income before Taxes Hence, Plyer's Effective Annual Tax Rate in 2015 = $ 187,000 / $ 550,000 = 34% Earnings per Share for Plyer's Shareholders in 2015 = Net Income / No. of shares outstanding Hence, the EPS for Plyer in respect of 2015 is $ 363,000 / 10,000 = $ 36.30 per share. Plyer did not dispose any of its Fixed Assets. Hence, Capital spending done in 2015 will be equal to Closing Fixed Assets - Opening Fixed Assets + Depreciation Charge for the year Therefore, Capital spending in 2015 = $ 510,000 - $ 410,000 + $ 120,000 = $ 220,000. Plyer's Operating Cash Flow in 2015 Net Income per Income Statement 363000 Add : Depreciation Expense 120000 Add : Interest Expense 40000 Add : Income Tax Expense 187000 347000 Cash Flow before Working Capital Changes 710000 Less : Increase in Accounts Receivable -100000 Add : Decrease in Inventory 15000 Add : Increase in Accounts Payable 25000 -60000 Operating Cash Flow 650000 Plyer's Investment in Net Working Capital for 2015 was $ 60,000 (from the working above) - excluding Cash. Including Cash, the net Investment in Working Capital was $ 60,000 + $ 40,000 (Difference in Closing and Opening Cash) = $ 100,000. Plyer's Cash Flow to Creditors for 2015 will be Opening Creditors + Cost of Goods Sold - Closing Creditors Hence, Plyer's Cash Flow to Creditors for 2015 = $ 350,000 + $ 2,275,000 - $ 375,000 = $ 2,250,000. Plyer's Cash Flow to Stockholders in 2015 will be the sum of all three cash flows Operating Cash Flow 650000 Investing Cash Flow (as above) -220000 Financing Cash Flow Interest Payments 40000 Share Capital issued 25000 Long Term Debt taken 125000 Dividend Payments -293000 Income Tax Payments -187000 -290000 Net Cash Flow to Stockholders in 2015 140000
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